Class 7 Simple Interest
Introduction to Simple Interest
Introduction to Simple Interest
Sometimes we borrow money from banks or moneylender for a specified period. At the end of this period, we must pay back the money which we borrowed and some additional money for using the banks or lenders money.
Principal
The money we borrowed from bank or moneylender is known as Principal.
Interest
The additional money paid by the borrower is known as interest.
Amount
The total money paid by the borrower to the bank or moneylender at the end of the specified period is known as amount.
Amount = Principal + Interest
Rate of Interest
It is the interest paid on Rs. 100 for one year. For example, a rate of 12% per annum means that the interest paid on Rs. 100 for one year is Rs. 12.
Time
It is the times for which the money is borrowed from bank or moneylender.
Simple Interest
If interest is calculated uniformly on the original principal throughout the loan period, it is known as simple interest.
I = (P×R×T)⁄100
I = Simple Interest
P = Principal
R = Rate of interest
T = Time
Let's see some examples to understand it better.
Example 1. Rs. 2000 is given at 9% per annum simple interest for 2 years. Find the interest which will be received at the end of two years.
Solution. Principal (P) = Rs. 2000
Rate of interest (R) = 9%
Time (T) = 2 Years
Simple interest = (P×R×T)⁄100
= (200×9×2)⁄100
= Rs. 360
Hence, the interest amount after 2 years is Rs. 360.
Example 2. Find the simple interest on Rs. 15000 at 8% per annum for 5 years. What will be the total amount after 5 years?
Solution. Here, P = 15000, R = 8% and T = 5 years
Interest = (15000×8×5)⁄100
= Rs. 6000
Total amount = Rs. 15000 + Rs. 6000
= Rs. 21000
Hence, the total amount will be Rs. 21000
Example 3. For a certain principal bank paid after 6 years is Rs. 12000 at a rate of 10% per annum. Find the principal amount.
Solution. Here, I = Rs. 12000, T = 6 years and R = 10%
I = (P×R×T)⁄100
=> P = (100×I)⁄R×T
=> P = (100×12000)⁄(10×6)
=> P = Rs. 20000
Hence, the principal is Rs. 20000.
Example 4. A person borrowed Rs. 4800 at 12% interest per annum from a bank. At the end of 2 1⁄2 years, he cleared the loan. Find the total amount he paid to the bank.
Solution. Here, P = Rs. 4800, R = 12% and T = 2 1⁄2 = 5⁄2 years
I = (P×R×T)⁄100
= 4800×12⁄100 × 5⁄2
= Rs. 1440
Total amount paid = Rs. 4800 + Rs. 1440
= Rs. 6240
Hence, total amount paid to the bank Rs. 6240.
Example 5. Find the interest on Rs. 4380 at 12% per annum for 200 days.
Solution. Here, P = Rs. 4380, R = 12% and T = 200 days = 200⁄365 years
Interest = 4380×12⁄100 × 200⁄365
= Rs. 288
Hence, the interest is Rs. 288.
Example 6. How many years will Rs. 1250 amount to Rs. 2000 at 8% per annum?
Solution. Here, Principal = Rs. 1250, R = 8% and Amount = Rs. 2000
Interest = Total Amount − Principal
= Rs. 2000 − Rs. 1250
= Rs. 750
I = (P×R×T)⁄100
=> T = 100×I⁄P×R
=> T = 100×750⁄1250×8
=> T = 7.5 Years
Hence, the tenure of the loan is 7.5 years.
Example 7. A sum of money doubles itself in 10 years. Find the rate of interest the bank is providing.
Solution. Assume that the principal is equal to P.
Then the total Amount is equal to 2P.
Interest = Amount − Principal
= 2P − P
= P
As we know,
I = (P×R×T)⁄100
=> R = (I×100)⁄P×T
=> R = (P×100)⁄P×10
=> R = 10%
Hence, the rate of interest is 10%.
Example 8. At what rate of interest per annum simple interest will a sum triple itself in 12 years?
Solution. Let's assume Principal = P
Then, total amount = 3P
Interest = 3P − P
= 2P
T = 12 Years
I = (P×R×T)⁄100
=> 2P = (P×R×12)⁄100
=> R = 200⁄12
=> R = 50⁄3
=> R = 162⁄3%
Hence, the rate of interest is 162⁄3%
Class-7 Simple Interest Worksheet
Answer Sheet
Simple-Interest-AnswerDownload the pdf
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